Dec. 18 (Bloomberg) -- Emerging-market stocks advanced,
pushing the benchmark index to an eight-month high, as prospects
of a recovery in China and a resolution to the U.S. budget
impasse bolstered raw materials companies.

Gold producer Zhaojin Mining Industry Co. rallied the most
in six weeks in Hong Kong, while Industrias CH SAB, Mexico’s
largest steelmaker, helped lead a gauge of emerging-market
materials stocks to the highest level since May. OAO
Rostelecom’s preferred shares rallied to a six-week high on a
report the Russian phone operator may need to buy stock to
maintain state control. Usinas Siderurgicas de Minas Gerais SA
led the Bovespa Index’s advance to the highest in 12 weeks.

The MSCI Emerging Markets Index climbed 0.6 percent to
1,046.24 in New York, the highest close since April 3. Goldman
Sachs Group Inc. raised its quarterly growth forecast for China,
where the economy has slowed over the past seven quarters. U.S.
President Barack Obama and House Speaker John Boehner moved
closer to a budget deal as Obama lowered his tax revenue demand
by $200 billion and offered to start tax rate increases at
incomes of $400,000, not $250,000.

“China’s coming back, and that means better times not only
for China but throughout the region,” Bruce McCain, chief
investment strategist at Key Private Bank in Cleveland, where he
oversees more than $20 billion, said by phone. “In the short
run, everyone is waiting to see what the fiscal cliff resolution
is.”

The 21 countries in the emerging-markets index send about
17 percent of their exports to the U.S., according to data
compiled by the World Trade Organization. China is the world’s
largest exporter and counts the U.S. and Europe as its biggest
trading partners.

Boehner said he will push a budget “plan B” measure that
would include tax increases on income of more than $1 million,
while continuing to negotiate with Obama. The two met at the
White House yesterday with days left to avert more than $600
billion in automatic spending cuts and tax increases that go
into effect next year if a budget deal isn’t reached.

The Bovespa closed at the highest level since Sept. 26 as
preferred shares of Usiminas, the second-largest Brazilian
steelmaker by output, jumped 7.5 percent for the steepest
advance in the MSCI emerging measure. The Mexican IPC Index
added 1.1 percent, climbing for a third day. Industrias CH
jumped 5.2 percent in Mexico City.

South Africa

Russia’s Micex Index rose 0.8 percent as the ruble
strengthened against the dollar for the first time in four days.

South Africa’s FTSE/JSE Africa All Shares Index rose to a
record after being closed for a public holiday yesterday.
ArcelorMittal South Africa Ltd., Africa’s largest steelmaker,
led gains in Johannesburg as it jumped 5.9 percent.

Hungary’s BUX Index climbed 1 percent, the most in two
weeks. The nation’s central bank will cut the European Union’s
highest benchmark rate for a fifth month, according to all 19
economists in a Bloomberg survey.

The Turkish lira strengthened 0.3 percent versus the dollar
as the central bank cut its benchmark repo rate for the first
time in 16 months. Turkish Airlines added 0.6 percent for a
record close after Yapi Kredi Yatirim raised its price estimate
for the stock on “strong” air traffic figures, according to an
e-mailed note today.

Sensex Rally

Uranium One Inc., which mines the raw material used in
reactor fuel, surged 13 percent in Johannesburg, the most since
August 2011, after the pro-nuclear Liberal Democratic Party won
a landslide election victory in Japan in a Dec. 16 poll.

Rostelecom’s preferred shares gained 1.4 percent to the
highest price since Nov. 2. The state-owned company’s units may
need to buy as much as 6.7 billion rubles of preferred shares
and convert them into ordinary stock to keep the government’s
stake above 50 percent after Rostelecom’s merger with
Svyazinvest, the Kommersant newspaper reported, citing proposals
by brokerage Renaissance Capital.

The BSE India Sensitive Index advanced 0.6 percent, the
most in two weeks, as the central bank hinted it may undertake
monetary policy easing next month even after it kept interest
rates unchanged for a fifth straight meeting.

Goldman Outlook

The developing-nations gauge has risen 14 percent this
year, matching a 14 percent increase in the MSCI World Index of
developed-country stocks. The emerging-markets gauge trades at
12.1 times estimated profit, compared with the MSCI World’s 13.9
multiple, according to data compiled by Bloomberg.

Most Chinese stocks fell as the Shanghai Composite Index
advanced 0.1 percent. The yuan strengthened for a second day
after the People’s Bank of China set a stronger reference rate
and amid speculation capital inflows will increase after the
government eased investment limits.

Goldman Sachs raised China’s fourth-quarter economic growth
forecast to 7.8 percent from 7.6 percent, reflecting “stronger-than-expected” production data in October and November,
according to a report.

Petronas Gains

TPK Holding Co., a supplier of touch panels for Apple
devices, jumped 5.6 percent in Taipei. TPK said in a statement
it will buy a unit from Dynamic Electronics Co. for $26 million
to expand capacity.

Petronas Dagangan Bhd. jumped 6.2 percent in Kuala Lumpur,
snapping a five-day slump and making it the second-best
performer on the MSCI Emerging Markets gauge after Usiminas.
Malaysia’s Employees Provident Fund bought 366,000 shares in the
company this month, stock exchange filings showed.

Shui On Land Ltd., the Shanghai-based developer, retreated
5.6 percent in Hong Kong, after Socam Development Ltd. cut its
holdings through a private placement. The company was the worst
performer on the emerging markets benchmark.